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Time to Go to Cash in Your 401(k)?

NEW YORK ( TheStreet) -- The big debates are right around the corner, the big election is just six weeks away, and the fiscal cliff is just over the horizon. Is it time to just sit this one out for now?

For many, the 401(k) or other tax-deferred retirement plan is absolutely their best vehicle for accumulating retirement dollars.

One can't start early enough to start putting money away. The more one puts away every week, the faster the money will accumulate. Not only is the money going in a tax benefit, but many companies today also do some matching to encourage employee participation.

While a 401(k) can be a great tax benefit and savings plan, it is also vital to keep your 401(k) invested in the right areas of the market and out of the wrong neighborhoods.

For instance, 2011 was very favorable to large-cap dividend stocks and not so kind to small and mid-cap growth stocks. This year is just the opposite: small-caps, mid-caps, technology stocks, biotech, homebuilders, or in other words risk-on, have been the place to be.

This year has not been a good year for investing in those same large-cap dividend payers -- or emerging markets, natural resources, and precious metals for that matter -- more on that in a moment. The worst place one could have their 401(k) invested in 2012 is in stable value or cash.

Let's take a quick look at my current rankings of the various asset classes that one has a choice of investing in:

Data from Best Stocks Now App

The U.S. dollar started going up in August of 2011 as Europe started to unravel. This spelled doom for the commodity related stocks and emerging markets. These assets like a falling dollar -- instead they got just the opposite.

Now that the Bernanke printing press is working at warp speed once again, the dollar has reversed its upward trend and is now falling once again. This is bullish for the precious metals and the emerging markets are starting to show signs of life again. A new cycle is beginning.
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